Latam FX and stocks dwindle, Mexican peso hits two-year low
Mexican economy grows more than expected in Q3
Brazilian ministers pledge to strengthen fiscal framework
Brazil's WEG slides after Q3 net profit disappoints
South Africa forecasts wider deficits, higher debt
MSCI Latam stocks index down 1%, FX off 0.7%
Updated at 3:20 p.m. ET
By Johann M Cherian and Ankika Biswas
Oct 30 (Reuters) -Most currencies in Latin America depreciated on Wednesday, with Mexico's peso touching levels not seen in more than two years, on uncertainty around the implications of a domestic judicial overhaul and the Nov. 5 U.S. presidential election.
MSCI's index tracking currencies in Latin America .MILA00000CUS lost 0.7% against the dollar =USD to touch levels last seen in early August.
Mexico's peso MXN= dropped for the fourth straight day, down 0.7% and hovering above 20-to-the-dollar. In the latest development following a recent judicial reform, Mexican Supreme Court Justice Alfredo Gutierrez said he will resign from the court at the end of August 2025.
"The first shock was a few months ago with the elections, when they delivered majorities in both houses of Congress, which means they have access to changing the Constitution," said Eduardo Ordonez Bueso, an emerging markets debt portfolio manager at BankInvest.
"Now people are thinking more in terms of the 'Trump trade' - the idea that (former U.S. President Donald) Trump will most likely win the elections and how he could point his finger at Mexico again."
The pesois among the top underperformers in the region, down over 15% on a year-to-date basis, with analysts expecting a Donald Trump victory toquickly weaken the peso to more than 21-per-dollar.
Republican candidate Donald Trump hasthreatened tariffs on the region's second-largest economy, with a 200% surcharge on vehicles imported from Mexico.
Even aspreliminary estimates showed Mexico's third-quarter economic performance was better-than-expected, analysts expect another interest-rate cut in November from the country's central bank.
Chile's peso CLP= was the worst-hit, down 0.8% against the dollar andhitting an over two-month low. Data showed manufacturing production in the world's largest copper producer in September dropped1.1% year-on-year.
The Colombian peso COP= weakened 0.6% to a one-year low, while Peru's sol PEN= edged up 0.1%.
Brazil's real BRL= slipped nearly 0.1% against the dollar to a two-month low.
The country's ministers pledged tostrengthen fiscal framework, trying to ease market concerns as they prepared to debate how to proceed with a fiscal adjustment that is expected to include spending cuts.
Concerns about fiscal instability have plagued the real, which is down nearly 16% so far this year despite interest rate hikes by Brazil's central bank.
Meanwhile, data showed Brazil created a net 247,818formal jobs in September, the most new jobs posted since February and above analysts' estimates.
MSCI's index tracking regional stocks .MILA00000PUS declined 1% to hit more than a two-month low.
Brazil's Bovespa .BVSP equities index was flat, with WEG WEGE3.SA down nearly 5% after the maker of motors reported third-quarter net income below estimates.
Elsewhere, South Africa's government forecastwider budget deficits and higher debt over the next three years, even as it anticipated better growth prospects.
Meanwhile, Saudi Arabia is "doubling down" on itsmulti-billion dollar plan to overhaul its economy and cut the kingdom's dependence on oil.
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1127.58 | -0.78 |
MSCI LatAm .MILA00000PUS | 2143.6 | -0.95 |
Brazil Bovespa .BVSP | 130704.56 | -0.02 |
Mexico IPC .MXX | 50938.35 | -0.45 |
Chile IPSA .SPIPSA | 6565.76 | -1.6 |
Argentina Merval .MERV | 1834921.61 | -0.581 |
Colombia COLCAP .COLCAP | 1354.97 | 1.16 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.7625 | -0.06 |
Mexico peso MXN= | 20.181 | -0.66 |
Chile peso CLP= | 961.9 | -0.82 |
Colombia peso COP= | 4416.5 | -0.56 |
Peru sol PEN= | 3.765 | 0.13 |
Argentina peso (interbank) ARS=RASL | 988.5 | -0.05 |
Argentina peso (parallel) ARSB= | 1160 | 3.02 |
Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Paul Simao and Nick Zieminski
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